Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
Traditional banks mull investment in nation's 4th internet-only bank
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By Lee Yeon-woo
The Industrial Bank of Korea (IBK) is examining whether to participate in the U-Bank Consortium, which aims to become the country's fourth internet-only bank, according to sources, Wednesday. This marks the fourth time a traditional bank has signaled its intention to bid for the endeavor.
As of Wednesday, four traditional banks, including IBK, are considering participating in different consortia.
NH NongHyup Bank said it is reviewing opportunities recently suggested by several consortia. Shinhan Bank is considering investing in shares of DOUZONE Bank (tentative), led by the software firm DOUZONE Biz. Woori Bank has sent an investment letter of intent to KCD Bank (tentative), led by Korea Credit Data.
The reason traditional banks are eyeing this new market is due to the success of the existing three internet-only banks, namely KakaoBank, Toss Bank and Kbank. With competitive interest rates and innovative mobile platforms, they are aggressively expanding their market shares.
Should investments prove successful, significant profits could be realized. KB Kookmin, Woori and Hana have already made successful investments in these three internet-only banks at their initial stages. KB Kookmin Bank holds 4.88 percent of KakaoBank's shares, Woori Bank owns 12.6 percent of Kbank's shares and Hana Bank holds 8.99 percent of Toss Bank's shares.
As financial authorities plan to tailor the fourth internet-only bank specifically for small business owners, traditional banks also anticipate synergies such as enhanced corporate lending.
Last year, financial authorities signaled their intention to introduce new players into the market and to stimulate competition. Market insiders expect that the authorities will announce guidelines within this year.